[Chip Talk] The Dawn of the 'Physical AI' Era... Samsung as the Key Variable in the HBM War

Samsung's '1c DRAM HBM4' Strategy:
After Jensen Huang's 'Physical AI Declaration',
Opportunities Emerge for Samsung, SK, and Others to Secure Orders

Jensen Huang, CEO of NVIDIA, stated that "the next step after generative artificial intelligence (AI) is physical AI," signaling that the competition among the 'Memory Big 3'?Samsung, SK, and Micron?to advance high-bandwidth memory (HBM) is expected to intensify by the end of this year. The Big 3 have announced plans to transition from the current 5th generation (HBM3E) to mass production of the 6th generation (HBM4) between the end of this year and early next year.

Jensen Huang, CEO of NVIDIA, is speaking at a global press conference held at the Fontainebleau Hotel in Las Vegas, USA, on the 7th (local time). Photo by Yonhap News

According to industry sources on the 11th, Samsung Electronics and SK Hynix will mass-produce HBM4 by the end of this year, while the U.S.-based Micron plans to do so next year. HBM is a type of DRAM product. The Big 3 are competing to establish mass production systems not only for HBM but also for the entire DRAM lineup, including 10nm (nanometer; 1nm = one billionth of a meter) 6th generation DRAM (1c DRAM). The 1c DRAM technology was first declared developed by SK Hynix in August last year. Since the end of last year, SK, Samsung, and Micron have all set up mass production systems and started their pursuit.

Samsung Creates a Variable in the HBM Competition

Within the industry, the most critical factor in the battle for HBM4 leadership, which will intensify from the end of this year to early next year, is whether Samsung's declared 1c DRAM HBM4 mass production system will succeed. It is expected that Samsung's Memory Division will create a bigger variable and shake the market more than SK and Micron.

Samsung Electronics is making every effort to refine its production lines and reallocate personnel to secure the 1c DRAM mass production system. Since the fourth quarter of last year, the DS (Device Solutions) division has begun building production lines by ordering related equipment at the P4 plant of the Pyeongtaek Campus in Gyeonggi Province to use HBM4 core dies (DRAM stacked on base dies). After Vice Chairman Jeon Young-hyun, who was appointed head of the DS division in May last year, made the decisive move to reassign personnel from the foundry (semiconductor contract manufacturing) division to the memory division, Samsung has been accelerating 1c DRAM mass production to reclaim leadership not only in HBM but also in the overall DRAM market.

SK Hynix is currently regarded as the world's top HBM company because it supplies the most 12-layer HBM3E (5th generation) to NVIDIA. The 12-layer HBM3E uses 5th generation DRAM (1b DRAM). The 1c DRAM has narrower line widths than 1b DRAM. Applying 1c DRAM technology means higher efficiency in speed, capacity, and other aspects compared to 1b DRAM products.

With CEO Huang's 'Physical AI declaration,' the global AI market is expected to diversify from LLM (Large Language Models) to LAM (Large Action Models), enabling synergy with DX (Device Experience) divisions equipped with smart home platforms and automotive electronics affiliates like Harman. Unlike LLMs, which mainly operate learning and inference functions, LAMs must also have mobility functions to move objects.

Samsung and SK Accelerate Collaboration with NVIDIA on 'Physical AI'

Physical AI extends beyond existing smartphones and PCs to robots, automobiles, drones, and machinery. If companies like NVIDIA, AMD, Amazon Web Services (AWS), Microsoft, Google, Intel, Broadcom, and Tesla entrust not only inference LLM chips but also mobility LAM chips (such as humanoids), Samsung, with its expertise in automotive solutions, could have an advantage.

NVIDIA possesses various vehicle computing solutions, including the newly announced Physical AI development platform Cosmos at CES 2025 in Las Vegas, DGX systems (data center AI-based stack training), Omniverse (simulation and synthetic data generation), and AGX (in-vehicle computer for real-time sensor safety data processing).

Following CEO Huang's 'Physical AI era' declaration, NVIDIA has increased collaborations with automakers, forming a strategic partnership with Hyundai Motor Group. Through the Cosmos platform, NVIDIA has also expanded the Physical AI ecosystem for autonomous vehicles by cooperating with companies such as Wabi, Wave, Foretellix, and Uber. SK has moved swiftly to secure HBM supply for NVIDIA's Cosmos platform.

The Unavoidable 'Hybrid Bonding'

The actual HBM3E 16-layer product revealed at the SK exhibition booth preview event held on the 6th (local time), the day before the opening of the world's largest electronics and IT exhibition, 'CES 2025,' at the Las Vegas Convention Center (LVCC) Central Hall in Nevada, USA. Photo by Yonhap News.

NVIDIA not only has Cosmos but also multiple platforms such as the Drive AGX Thor system-on-chip (SoC) based on the Blackwell architecture for autonomous vehicles and the GeForce RTX 50 GPU for AI laptops. Big tech companies like AMD and Intel are accelerating the development of similar products. As competition among big tech firms to launch AI platforms intensifies, HBM order volumes also increase because these companies require HBM to enhance product efficiency. For memory manufacturers like Samsung, SK, and Micron, this means they must continuously increase production and improve yield rates by developing optimal manufacturing processes.

Industry insiders suggest that Samsung Electronics may apply a new process called hybrid bonding to stack 16-layer HBM4 products. Last year, SK Hynix announced it could apply hybrid bonding to 16-layer products, and Samsung appears to be improving the completeness of the same process to catch up. Hybrid bonding is a next-generation packaging technology that directly bonds copper without using 'bumps' to connect chips. Copper serves as the pathway for signals between semiconductors. Enhancing the hybrid bonding process allows for reducing chip size and improving performance.

There is no indication that Samsung plans to abandon the thermocompression non-conductive film (TC-NCF) system, which has been considered inferior to SK Hynix's mass reflow-molded underfill (MR-MUF) technology in terms of yield, productivity, and heat dissipation performance. Samsung has consistently adhered to TC-NCF technology.

Chinese Pursuit Poses a Burden for All Big 3

The reason Vice Chairman Jeon Young-hyun of Samsung Electronics has gone 'all-in' on 1c DRAM and HBM4, even resorting to personnel reallocation, is based on the realistic goal of catching up with SK Hynix, the leader in HBM within the memory sector.

Recently, news of Chinese CXMT's mass production of high-value-added products (DDR5) has spread, fueling a sense of crisis in the industry that "falling behind in memory means the end." This concern applies to all Big 3 companies and is no exception for HBM. Increasing big tech orders in the ASIC (application-specific integrated circuit) domain, such as HBM, is the best card to outrun Chinese memory competition for a considerable period.

In particular, Samsung is advised to maximize its delivery performance related to smartphones like the Galaxy S25 before the 1c DRAM HBM4 market blooms at the end of the year. Park Yoo-ak, a researcher at Kiwoom Securities, said, "Through profitability improvements in the set business division (MX division) following the Galaxy S25 launch and expanded HBM sales to ASIC customers leading to growth in the DRAM segment's performance, Samsung Electronics is expected to achieve a turnaround in results in the first quarter."